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ECB Changes Its Policy for Using Its Repo Facility

The ECB said that it no longer intends to accept ABS collateral for its repo operation if it is not backed by a liquidity facility that is worth at the minimum 20% of the deal’s nominal value.

HSBC France Launches Covered-Bond Program

HSBC France, Paris, has launched an 8 billion euro ($11.6 billion) covered-bond program under French law.

Moody’s Publishes Outlook of EMEA Regions

Over the next 12 to 18 months, the EMEA region can expect stable and negative performance of its major structured finance asset classes.

U.K. Mortgage Lending Continues to be Challenged

The number of mortgages approved in the U.K. in July 2008 fell by 71% year over year.

MoFo Adds Partner to Office in China

Morrison & Foerster has hired Stephen Birkett as a partner in its corporate group in Hong Kong.

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Articles

DPR Business - Hazy But Not Lazy

The lazy, hazy days of summer didn't fully envelop residents of the DPR world. They weren't exactly lazy, when a handful of DPR deals either closed or ramped up in a market so grim that any cross-border closing is an event. But 'hazy' isn't so far off the mark, as players hid details as best they could. Turkiye Garanti Bankasi originated a deal where the involved parties let in some light, though pricing stayed in the dark. Barclays Capital led the Ä200 million, 10-year transaction sold entirely to the European Investment Bank (EIB), a multilateral that entered the sector of diversified payment rights only a few weeks earlier. Garanti was following in the still-fresh footsteps of Turkish peer Akbank, which closed a $393 million transaction via WestLB.

European Primary Market Remains Quiet

The August pipeline remained quiet, but market sources said that there is some indication that investors are looking to put money to work. The problem is that, at the current spreads, it is unlikely that issuers will be tempted to veer away from the now-routine securitization and repo format that has accounted for over 90% of the issuance seen so far this year.

Central Banks Move to Adjust Liquidity Programs

Both the Bank of England (BoE) and European Central Bank (ECB) board members said last week that they are looking at possible new restrictions on the liquidity facilities they currently have on offer. The changes will address concerns over the potential for excessive usage of securitized debt for ECB collateral as well as the programs' long-term sustainability.

Northern Rock Risk Surfaces

The now nationalized U.K. bank Northern Rock's Granite master trust is reporting a rising trend of arrears since the end of last year - delinquencies have climbed to 1.52%, which is almost four times the level recorded a year ago. The number of properties taken into possession each month has also roughly doubled. Monthly losses as of July 2008 were £2.9 million ($5.16 million), compared with £0.2 million a year ago, according to figures reported by Merrill Lynch. Northern Rock's Granite master trust has reported a much higher number of possessions than its peers, with a severe acceleration in the last three months.

Distressed Buyers Hit Roadblocks

Much has been said about the emergence of distressed funds taking advantage of buying opportunities in the European market. However, market analysts said that prices must go wider before distressed buying really takes off. Worldwide subprime losses have now grown to a cumulative $342.9 billion, of which Ä155.5 billion ($224.5 billion) is attributed to Europe. UBS tops the list with a Ä29.9 billion loss. The European market has started to experience increased negative rating migration on the back of weakening in certain market segments like the Spanish RMBS market and U.K. CMBS. Increasingly punitive revisions of rating criteria have also contributed to downgrades in recent months.

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